EU stimulus fund idea could be reused, if successful now -Gentiloni

European Economic Commissioner Paolo Gentiloni attends a press conference of the Reading College meeting during a debate on Poland’s challenge to the supremacy of EU laws in the European Parliament in Strasbourg, France , October 19, 2021. Ronald Wittek / Pool via REUTERS

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BRUSSELS, December 13 (Reuters) – The European Union’s idea of ​​jointly borrowing for common goals, such as post-pandemic recovery, could be used again by the EU if the implementation of the relaunch is a success, said European Economic Commissioner Paolo Gentiloni said on Monday.

In an unprecedented move to prevent economic fragmentation from the COVID-19 pandemic, European Union countries agreed last year to jointly borrow 800 billion euros ($ 903 billion) and to devote to rebuilding their greener and more digitized economies.

The joint borrowing was seen by many as breaking a taboo and financial markets greeted the move enthusiastically, sparking speculation whether the stimulus fund, called Next Generation EU, could be turned into a more permanent deal – which many northern European countries are strongly against.

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“Indeed, it was an extraordinary decision,” Gentiloni told the European Parliament’s budget committee in Strasbourg during a hearing in response to a question from a lawmaker.

“But we have to recognize the fact that it was designed on an ad hoc basis – it is in legal acts. Does this mean that this kind of methodology to mobilize common resources for a common goal could never be used in the EU again? I do not think so. I think it could happen, it has nothing to do with making it permanent, “Gentiloni said.

“But for this we need success in implementing the next generation of the EU and in the challenge of mobilizing stronger own resources”, said Gentiloni, referring to the revenue streams dedicated to the budget of the EU from which the 800 billion euros of borrowing must be repaid.

Under this program, each of the 27 EU countries will obtain grants and cheap loans to invest in reducing carbon dioxide emissions and adapting economies to the digital age.

The money for the projects will come from the Commission, which will pay it to governments in installments until 2026, once milestones and goals are jointly agreed.

The Commission has already paid € 54 billion in prepayments to 18 countries to launch projects. Further prepayments are underway, as 22 countries have already had their spending plans approved by the Commission in line with common EU goals.

Of the remaining five countries, the approval of the plans of the Netherlands and Bulgaria was delayed due to changes of government in those countries, and the Commission said satisfactory progress had been made in approving the program. from Sweden.

The approval of Poland and Hungary’s spending plans, however, faces greater challenges because the EU executive said Poland does not meet the requirement to have a judiciary. independent while Hungary has corruption problems – two problems that endanger the proper use of EU funds.

($ 1 = 0.8864 euro)

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Reporting by Jan Strupczewski; edited by Jonathan Oatis

Our Standards: Thomson Reuters Trust Principles.

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